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TEVA Pharmaceutical Industries Ltd. Reports 1999 Fourth Quarter and Year End Financial Results;
Fourth Quarter Net Income Up 35%
Jerusalem, Israel, February 14, 2000 - Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) today reported financial results for the fourth quarter and year ended December 31, 1999.
Total consolidated sales in the 1999 fourth quarter amounted to $379.9 million, an increase of 28% over the comparable 1998 quarter. Net income amounted to $40.1 million, compared with $1.4 million in the comparative period, the latter after absorbing one-time charges of $28.2 million. Before one time charges, 1999 net income rose 35%.
Earnings per ADR for the fourth quarter of 1999 were $0.64, as compared with $0.06 in the corresponding quarter after the one-time charges, and $0.51 before these charges.
Total consolidated sales for the year were $1.28 billion, an increase of 15% over 1998. Net income, after deducting one-time charges, amounted to $117.8 million. Before deducting one-time charges of $17.7 million in 1999 and $28.5 million in 1998, net income amounted to $135.5 million, a 39% increase over the $97.3 million in 1998.
Earnings per ADR for the year, after deducting one-time charges, amounted to $1.88, compared to $1.15 in 1998. Before deducting one-time charges in 1999 and 1998, earnings per ADR rose 35% to $2.16, as compared to $1.60 last year.
It should be noted that the financial results of Copley Pharmaceutical, Inc., ("Copley") acquired on September 17, 1999, are consolidated for the first time in the fourth quarter of 1999 although Copley was already consolidated in Teva's September 30, 1999 Balance Sheet. Also, the results of Pharmachemie B.V. ("Pharmachemie"), acquired on July 1, 1998, were not included in the first half of 1998.
Eli Hurvitz, President and Chief Executive Officer, commented, "We are very pleased with our 1999 results, in which Teva returned to its historical growth rates in both sales and net income. This is especially evident in the fourth quarter - Teva's best ever. During 1999, Teva strengthened its leadership position in the global generic market through the acquisition of U.S. based Copley and the announced acquisition of Canada's Novopharm Ltd. ("Novopharm"). Together with Copley and Novopharm, I believe, Teva will become the global generic leader. Both of these acquisitions will contribute strongly to Teva's operations in the coming year."
Fourth Quarter 1999 Highlights
The main drivers behind the sales growth during the fourth quarter were:
- A strong performance in North America where pharmaceutical sales increased
quarter over quarter by $61.3 million. Approximately one half of the increase is from the first time consolidation of Copley's results, and the balance represents sales from the introduction of new products during the year, including the generic versions of Cardizem CD® and Wellbutrin® launched during the fourth quarter.
- Record sales in Europe. Strong unit volumes and newly launched products, as well as price increases, resulted in pharmaceutical sales rising 33% to $92.2 million.
- Continued market penetration by Copaxone®, Teva's first innovative product,
prescribed to treat patients with relapsing-remitting multiple sclerosis. Sales (as booked by Teva) increased more than 2.5 times over the fourth quarter of 1998; In-market sales of Copaxone® were $49.0 million, an increase of 50% over the comparable quarter last year.
The higher consolidated gross profit margin, (40.2% in 1999 compared with 39.4% in 1998) reflects higher sales of Copaxone®, an improved product mix in the U.S. and Europe, as well as the positive results of Teva's worldwide production rationalization program initiated two years ago.
While Gross R&D expenses (net of purchased R&D) increased 47% to $27.2 million, the corresponding net R&D increased by a lower 38% to $21.8 million due to higher grants and participations, including for the first time participation of H. Lundbeck A/S ("Lundbeck") in Teva's R&D spending.
During the fourth quarter of 1999, initial R&D expenses were recorded on the two further developments of Copaxone®, namely, Oral Copaxone, and "Promise", the clinical trial for primary progressive patients.
While SG&A increased in nominal terms, mainly as a result of the consolidation of Copley (including amortization of its goodwill), as a percentage of sales, SG&A decreased to 18.2% in the fourth quarter of 1999 from 18.6% in the fourth quarter of 1998, reflecting synergies achieved within Teva's worldwide operations.
Finance expenses increased by 45%. This reflects mainly the interest charges on the Copley acquisition debt. Taxes on income were at a rate of 22.9% for the 1999 fourth quarter, several percentage points lower than the 30% provided for in the fourth quarter of 1998 (on income before one-time charges). Changes in Teva's income mix are the main reasons for this decrease.
During the quarter, Teva generated cash from operations of $39.5 million, as compared with $9.1 million in the comparable quarter of 1998.
Fiscal 1999 Highlights
The $166.0 million increase in sales year over year is almost evenly split between organic growth and the contribution to sales by the acquisitions of Pharmachemie and Copley. Most of the organic growth came from Europe and the balance from the U.S., sales of Copaxone® and the API Business.
Consolidated quarterly sales rose sequentially in 1999, with most of the increase occurring in the second half of the year.
During the first three quarters of 1999, sales growth was primarily attributable to Teva's strong performance in Europe. The fourth quarter sales increase reflects higher U.S. sales, partially due to the first time consolidation of Copley.
Gross profit margins varied during 1999, but overall showed a significant increase over 1998, averaging 40.1% in 1999 as compared to 37.7% in 1998.
The improvement in 1999 reflects the positive effects of Teva's rationalization measures, predominantly in Europe, as well as the introduction of new, higher margin products in the U.S., mainly towards the end of the year.
R&D expenses (net of purchased R&D) for 1999 increased 21% to $91.6 million, while net R&D increased 20% to $ 81.8 million.
SG&A as a percentage of sales decreased from 18.6% to 18.2%, reflecting the benefits of the rationalization plan.
The tax rate of 24.7% in 1999 is lower than the 26% provided for in 1998 (in both years net of one-time charges), reflecting a change in the income mix.
Cash flow from operations for 1999 amounted to $154.0 million, as compared to $70.0 million in 1998.
Mr. Hurvitz continued, "In addition to Teva's strong operating performance, we also consummated a number of significant acquisitions and joint ventures during the year that provide an important foundation for future growth. These include the acquisition of Copley in September 1999; the acquisition of Novopharm (closing is expected on or before March 31, 2000); the agreement reached with BioTechnology General Corp. ("BTG"), whereby Teva obtained global marketing rights for biogeneric products to be developed and manufactured by BTG; and a strategic alliance with Lundbeck of Denmark for the co-development and marketing in Europe of two of its products for the treatment of Parkinson's disease."
"In addition," Mr. Hurvitz added, "during 1999, Teva substantially completed its two-year production rationalization program which included: transferring production of tablets from APS Berk (U.K.) to the European tableting center of expertise in Biogal (Hungary) and to Israel; transferring production of sterile oncological products from Netanya (Israel) to a sterile oncological production center in Haarlem (the Netherlands); and closing production facilities in Zaandam, the Netherlands and Paterson (N.J., USA) and consolidating the production previously carried out at those plants to other facilities in the U.S., the Netherlands and Israel. In addition, we expect to exit the Copley facility in Canton, Mass. before the end of this year. Production of these products will be transferred to other facilities in the U.S. and Israel".
"Teva is entering year 2000 with a pipeline of 32 products awaiting FDA approval (including 4 of Biovail) and 10 tentative approvals. Collectively, the innovative product markets for these products exceeds $10 billion. We are proud of our progress to date and are very excited about our future," Mr. Hurvitz concluded.
In a separate announcement today, Teva's Board of Directors declared an increased regular quarterly cash dividend and a two for one stock split of the Company's Ordinary Shares.
Teva Pharmaceutical Industries Ltd. is Israel's largest pharmaceutical company, with over 80% of its sales outside Israel, mainly in the United States and Europe. The Company develops, manufactures and markets generic and branded human pharmaceuticals, active pharmaceutical ingredients and medical disposables.
Safe Harbor Statement: This report contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the Company's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward looking statements. Important factors that could cause or contribute to such differences include the impact of pharmaceutical industry regulation, the difficulty of predicting FDA and other regulatory authority approvals, the regulatory environment and changes in the health policies and structure of various countries, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, uncertainties regarding market acceptance of innovative products newly launched , currently being sold or in development , the impact of restructuring of clients , reliance on strategic alliances , fluctuations in currency, exchange and interest rates , operating results , the impact of the year 2000 issue and other factors that are discussed in the Company's Annual Report on Form 20-F and the Company's other filings with the U.S. Securities and Exchange Commission.
TEVA Pharmaceutical Industries Limited
Consolidated Statements of Income
(In thousands, except Earnings per ADR)
| |
Quarter Ended
 |
Year Ended
|
| |
December 31
|
| |
1999
|
1998
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1999
|
1998
|
| |
U.S. Dollars
|
| |
|
|
|
|
| Sales |
379,904 |
296,906 |
1,282,406 |
1,115,928 |
| Cost of Sales |
227,203
|
179,976
|
767,627
|
694,763
|
| Gross Profit |
152,701 |
116,930 |
514,779 |
421,165 |
| Research and Development Expenses: |
|
|
|
|
| Total expenses |
27,155 |
18,414 |
91,622 |
75,581 |
| L e s s grants and participations |
5,313
|
2,559
|
9,780
|
7,511
|
| |
21,842 |
15,855 |
81,842 |
68,070 |
| Selling, General Administrative Expenses |
69,197
|
55,077
|
233,891
|
208,024
|
| |
61,662 |
45,998 |
199,046 |
145,071 |
| Acquired Research and Development* |
- |
8,000 |
17,700 |
13,500 |
| Restructuring Expenses* |
-
|
11,030
|
-
|
15,030
|
| Operating Income |
61,662 |
26,968 |
181,346 |
116,541 |
| Financial Expenses - net |
9,867 |
6,790 |
30,165 |
23,328 |
| Losses from Realization of Assets and Discontinuation of Activities* |
- |
12,760 |
- |
3,308 |
| Other Income - net |
1,090
|
2,907
|
10,781
|
8,940
|
| Income Before Taxes on Income |
52,885 |
10,325 |
161,962 |
98,845 |
| Taxes on Income |
12,088
|
9,250
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44,335
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30,888
|
| |
40,797 |
1,075 |
117,627 |
67,957 |
| Share in Profits (Losses) of Associated Companies |
(1,024) |
434 |
(550) |
903 |
| Minority Interests in Consolidated Subsidiaries |
281
|
(124)
|
756
|
(30)
|
| Net Income * |
40,054
|
1,385
|
117,833
|
68,830
|
| Earnings per adr ($) ** |
0.64
|
0.06
|
1.88
|
1.15
|
| Weighted Average number of adr's |
62,959
|
62,836
|
62,941
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62,651
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| |
|
|
|
|
| |
|
|
|
|
| * Net Income before Non- Recurring Items |
40,054
|
29,619
|
135,533
|
97,341
|
| **Earnings per adr ($) Before Non Recurring Items |
0.64
|
0.51
|
2.16
|
1.60
|
Teva Pharmaceutical Industries Limited
Consolidated Balance Sheets
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December 31
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| |
1999
|
1998
|
| |
U.S. dollars In thousands
|
| |
|
|
| A S S E T S |
|
|
| Current Assets |
|
|
| Cash and cash equivalents |
77,177 |
47,074 |
| Short-term investments |
17,226 |
2,148 |
| Accounts receivable: |
|
|
| Trade |
361,293 |
274,592 |
| Other |
103,309 |
99,182 |
| Inventories |
351,478
|
353,249
|
| T o t a l current assets |
910,483 |
776,245 |
| Investments and Non-Current Receivables |
31,681 |
32,566 |
| Property, Plant and Equipment |
|
|
| Cost |
856,493
|
754,638
|
| Less accumulated depreciation |
377,957
|
299,656
|
| |
478,536 |
454,982 |
| Intangible Assets, net |
293,319
|
172,205
|
| |
1,714,019
|
1,435,998
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| |
|
|
| Liabilities and Shareholders' Equity |
|
|
| Current Liabilities |
|
|
| Short-term credit - mainly from banks |
276,259 |
324,534 |
| Accounts payable and accruals: |
|
|
| Trade |
114,454 |
123,743 |
| Other |
140,053 |
84,814 |
| Proposed dividend |
6,806
|
4,554
|
| T o t a l current liabilities |
537,572 |
537,645 |
| Long-Term Liabilities |
|
|
| Deferred income taxes |
31,687 |
33,172 |
| Accrued employee rights upon retirement, net of amount funded |
11,041 |
3,895 |
| Loans and other liabilities |
391,419
|
201,699
|
| T o t a l long-term liabilities |
434,147
|
238,766
|
| T o t a l liabilities |
971,719 |
776,411 |
| Minority Interests |
17 |
781 |
| Total Shareholders Equity |
742,283
|
658,806
|
| |
1,714,019
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1,435,998
|
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Company Contacts:
Dan Suesskind
Chief Financial Officer
Teva Pharmaceutical Industries, Ltd.
(011) 972-2-5892-811
Investor Relations Contacts:
Donna N. Stein/Valerie Carmello
(212) 850-5600
Press Contact:
Gregory Q. Tiberend
Morgen-Walke Associates, Inc.
(212) 850-5600
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